As Reported by the Senate Economic Development, Technology       2            

                     and Aerospace Committee                       2            

123rd General Assembly                                             5            

   Regular Session                             Sub. S. B. No. 265  6            

      1999-2000                                                    7            


                    SENATORS HORN-HAGAN-SPADA                      9            


_________________________________________________________________   11           

                          A   B I L L                                           

             To amend sections 1724.05, 1724.06, 1726.11,          13           

                1726.12, 5709.67, and 5709.68 of the Revised Code  14           

                to modify requirements concerning the Department   15           

                of Development's annual enterprise zone report,    16           

                to increase the penalty assessed against           17           

                municipal corporations and counties that fail to                

                meet annual enterprise zone agreement reporting    18           

                requirements from $500 to $5,000, and to transfer  19           

                the oversight of community improvement             20           

                corporations and development corporations from                  

                the Director of Development to the Auditor of      21           

                State.                                                          




BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:        23           

      Section 1.  That sections 1724.05, 1724.06, 1726.11,         25           

1726.12, 5709.67, and 5709.68 of the Revised Code be amended to    26           

read as follows:                                                   27           

      Sec. 1724.05.  Annually, before the thirty-first day of      36           

January, each community improvement corporation shall submit a     37           

report to the director of development AUDITOR OF STATE.  The       38           

director AUDITOR OF STATE ALSO, by rule, shall establish           40           

guidelines governing the scope and frequency of audits of such     41           

THOSE corporations.  Each corporation, when required by the        43           

director AUDITOR OF STATE, shall submit TO THE AUDITOR OF STATE A  44           

REPORT OF an audit by a certified public accountant.  The          45           

director AUDITOR OF STATE is hereby authorized to receive and      46           

                                                          2      


                                                                 
file THOSE annual reports and REPORTS OF THOSE audits.  Annual     47           

reports shall cover all financial and other transactions of the    49           

corporation for the preceding year.  Audits AND REPORTS OF THOSE   50           

AUDITS shall cover such THE period of time as THAT the director    52           

AUDITOR OF STATE specifies.  The director AUDITOR OF STATE shall   53           

analyze the annual reports and THE REPORTS OF THOSE audits to      54           

determine whether or not the activities of the corporation are in  56           

accordance with Chapter 1724. of the Revised Code THIS CHAPTER.    57           

      Sec. 1724.06.  If any corporation required by section        66           

1724.05 of the Revised Code to submit ANNUAL reports or REPORTS    67           

OF audits TO THE AUDITOR OF STATE fails or neglects to make the    69           

AN annual report to the director of development as required by     71           

law AUDITOR OF STATE for ninety days after the time prescribed by  72           

law for making such THAT report, or fails to submit the results    74           

REPORT of an audit within ninety days of the date for ITS          75           

submission of the audit as specified by the director AUDITOR OF    77           

STATE, the director AUDITOR OF STATE shall certify such THAT fact  79           

to the secretary of state.  The secretary of state THEN shall                   

thereupon cancel the articles of the corporation by filing and     80           

recording the certificate of the director AUDITOR OF STATE or a    81           

true copy thereof OF IT.  Thereupon all ALL of the rights,         84           

privileges, and franchises conferred upon such THE corporation by  86           

such THOSE articles of incorporation THEN shall cease.  The        88           

secretary of state shall immediately notify the corporation of     89           

the action taken.  Reinstatement may be accomplished within two    90           

years after such THAT cancellation upon proper filing of all       92           

delinquent ANNUAL reports and REPORTS OF audits to the                          

satisfaction of the director AUDITOR OF STATE and THE filing his   94           

OF THE AUDITOR OF STATE'S certificate thereof REFLECTING THAT      96           

SATISFACTION with the secretary of state, who shall be entitled    97           

to a fee of ten dollars for recording the same CERTIFICATE in the  99           

corporate records.  Such THAT filing may be made by any officer,   101          

member, creditor, receiver, lessee, or sublessee of the                         

corporation, and any such person or his agent OF ANY SUCH PERSON   102          

                                                          3      


                                                                 
shall be granted access to the books and records of the            103          

corporation for such THAT purpose.  The rights, privileges, and    105          

franchises of a corporation whose articles have been reinstated    106          

are subject to section 1702.60 of the Revised Code.                107          

      Sec. 1726.11.  Annually before the thirty-first day of       116          

January, a corporation incorporated under Chapter 1726. of the     117          

Revised Code THIS CHAPTER shall submit a report to the director    119          

of development AUDITOR OF STATE, together with A REPORT OF an      120          

audit by a certified public accountant and the director of         121          

development.  THE AUDITOR OF STATE is hereby authorized to         122          

receive and file the same THAT ANNUAL REPORT AND AUDIT REPORT.     123          

Such THOSE reports and audits shall cover all financial and other  126          

transactions of said THE corporation for the preceding year.       127          

Said director of development THE AUDITOR OF STATE shall analyze    128          

said THOSE reports and audits to determine whether or not the      130          

activities of such corporations THE CORPORATION are in accordance  131          

with Chapter 1726. of the Revised Code THIS CHAPTER.               132          

      Sec. 1726.12.  If any corporation required by section        141          

1726.11 of the Revised Code TO SUBMIT AN ANNUAL REPORT TOGETHER    142          

WITH A REPORT OF AN AUDIT TO THE AUDITOR OF STATE fails or         143          

neglects to make SUBMIT the annual report OR THE REPORT OF THE     144          

AUDIT to the director of development as required by law AUDITOR    146          

OF STATE for ninety days after the time prescribed by law for      148          

making such report THEIR SUBMISSION, or if any such report         149          

discloses that the corporation has failed to begin business for a  150          

period of three years from the effective date of the filing of     151          

its articles of incorporation, the director of development         153          

AUDITOR OF STATE shall certify such THAT fact to the secretary of  154          

state.  The secretary of state THEN shall thereupon cancel the     155          

articles of the corporation by appropriate entry upon the margin   157          

of the record thereof OF THE ARTICLES.  Thereupon, all ALL the     158          

powers, privileges, and franchises conferred upon such THE         159          

corporation by such THOSE articles of incorporation THEN shall     161          

cease.  The secretary of state shall immediately notify the        163          

                                                          4      


                                                                 
corporation of the action taken.                                   164          

      Sec. 5709.67.  (A)  Except as otherwise provided in          173          

sections 5709.61 to 5709.69 of the Revised Code, the director of   174          

development shall administer those sections and shall adopt such   175          

rules as are necessary to ensure that no zone is certified or      176          

remains certified unless it meets any applicable requirements of   177          

division (A) of section 5709.61 of the Revised Code, and to        178          

determine the number of positions attributable to an enterprise    179          

for the purposes of division (A)(3) of section 5709.64 of the      180          

Revised Code.  The director shall assign to each zone currently    181          

certified a unique designation by which the zone shall be          182          

identified for purposes of administering sections 5709.61 to       183          

5709.69 of the Revised Code.  The tax commissioner shall           184          

administer all other tax incentives provided under sections        185          

5709.61 to 5709.69 of the Revised Code and shall adopt such rules  186          

as are necessary to carry out that duty.  No tax incentive         187          

qualification certificate or employee tax credit certificate       188          

shall be issued or remain in effect unless the enterprise          189          

applying for or holding the certificate complies with all such     190          

rules.  The director of job and family services shall administer   192          

the incentive provided under division (B)(1) of section 5709.66    193          

of the Revised Code and shall adopt such rules as are necessary    194          

to carry out that duty.  No extension of benefits certificate      195          

shall be issued or remain in effect unless the enterprise          196          

applying for or holding the certificate complies with all such     197          

rules.                                                                          

      (B)  Annually NOT LATER THAN THE FIRST DAY OF AUGUST EACH    199          

YEAR, the director of development shall report to the general      201          

assembly the ON ALL OF THE FOLLOWING FOR THE PRECEDING CALENDAR    202          

YEAR:                                                                           

      (1)  THE cost to the state of the tax and other incentives   205          

provided under sections 5709.61 to 5709.69 of the Revised Code,    206          

the;                                                                            

      (2)  THE number of tax incentive qualification               208          

                                                          5      


                                                                 
certificates, employee tax credit certificates, and extension of   209          

benefits certificates issued, the;                                 210          

      (3)  THE names of the municipal corporations and counties    213          

that have entered agreements under sections 5709.62, 5709.63, and  214          

5709.632 of the Revised Code, and the;                             215          

      (4)  THE number of new employees hired as a result of the    217          

tax and other incentives provided under sections 5709.61 to        218          

5709.69 of the Revised Code;                                       219          

      (5)  INFORMATION ON AGREEMENT TERMS CONCERNING SCHOOL        221          

DISTRICT REVENUE THAT ARE NOT PROVIDED FOR IN SECTION 5709.631 OF  222          

THE REVISED CODE AND THAT ARE FORWARDED TO THE DIRECTOR UNDER      225          

DIVISION (H) OF SECTION 5709.62, DIVISION (H) OF SECTION 5709.63,  226          

OR DIVISION (G) OF SECTION 5709.632 OF THE REVISED CODE.  The      228          

      THE report shall include a finding by the director as to     231          

whether the incentives provided under sections 5709.61 to 5709.69  232          

of the Revised Code have resulted in the creation of more          233          

positions in the state than would have been created without the    234          

incentives.  THE DIRECTOR SHALL SEND A COPY OF THE REPORT TO EACH  235          

MEMBER OF THE GENERAL ASSEMBLY AND TO THE DIRECTOR OF THE          236          

LEGISLATIVE SERVICE COMMISSION.                                    237          

      (C)  All forms used in connection with the administration    239          

of sections 5709.61 to 5709.69 of the Revised Code, except forms   240          

administered directly by the tax commissioner, by the director of  242          

job and family services, or by a county or municipal corporation,  244          

are subject to review and approval by the state forms management   245          

control center under sections 125.91 to 125.98 of the Revised      246          

Code.                                                                           

      Sec. 5709.68.  (A)  On or before the thirty-first day of     255          

March each year, a municipal corporation or county that has        256          

entered into an agreement with an enterprise under section         257          

5709.62, 5709.63, or 5709.632 of the Revised Code shall submit to  258          

the director of development and the board of education of each     259          

school district of which a municipal corporation or township to    260          

which such an agreement applies is a part a report on all such OF  261          

                                                          6      


                                                                 
THOSE agreements in effect during the preceding calendar year.     263          

The report shall include ALL OF the FOLLOWING information          264          

described in divisions (A)(1) to (7) of this section.:             266          

      (1)  The designation, assigned by the director of            268          

development, of each urban jobs and enterprise zone within the     269          

municipal corporation or county, the date each zone was            270          

certified, the name of each municipal corporation or township      271          

within each zone, and the total population of each zone according  272          

to the most recent data available.;                                273          

      (2)  The number of enterprises that are subject to such      275          

THOSE agreements and the number of full-time employees subject to  276          

those agreements within each zone, each according to the most      277          

recent data available and identified and categorized by the        278          

appropriate standard industrial code, and the rate of              279          

unemployment in the municipal corporation or county in which the   280          

zone is located for each year since each zone was certified.;      281          

      (3)  The number of agreements approved and executed during   283          

the calendar year for which the report is submitted, the total     284          

number of agreements in effect on the thirty-first day of          285          

December of the preceding calendar year, the number of agreements  286          

that expired during the calendar year for which the report is      287          

submitted, and the number of agreements scheduled to expire        288          

during the calendar year in which the report is submitted.  For    289          

each agreement that expired during the calendar year for which     290          

the report is submitted, the municipal corporation or county       291          

shall include the amount of taxes exempted and the estimated       292          

dollar value of any other incentives provided under the            293          

agreement.                                                         294          

      (4)  The number of agreements receiving compliance reviews   296          

by the tax incentive review council in the municipal corporation   297          

or county during the calendar year for which the report is         298          

submitted, including all of the following information:             299          

      (a)  The number of agreements the terms of which an          301          

enterprise has complied with, indicating separately for each such  302          

                                                          7      


                                                                 
agreement the value of the real and personal property exempted     303          

pursuant to the agreement and a comparison of the stipulated and   304          

actual schedules for hiring new employees, for retaining existing  305          

employees, for the amount of payroll of the enterprise             306          

attributable to these employees, and for investing in              307          

establishing, expanding, renovating, or occupying a facility;      308          

      (b)  The number of agreements the terms of which an          310          

enterprise has failed to comply with, indicating separately for    311          

each such agreement the value of the real and personal property    312          

exempted pursuant to the agreement and a comparison of the         313          

stipulated and actual schedules for hiring new employees, for      314          

retaining existing employees, for the amount of payroll of the     315          

enterprise attributable to these employees, and for investing in   316          

establishing, expanding, renovating, or occupying a facility;      317          

      (c)  The number of agreements about which the tax incentive  319          

review council made recommendations to the legislative authority   320          

of the municipal corporation or county, and the number of such     321          

THOSE recommendations that have not been followed;                 323          

      (d)  The number of agreements rescinded during the calendar  325          

year for which the report is submitted.                            326          

      (5)  The number of enterprises that are subject to           328          

agreements that expanded within each zone, including the number    329          

of new employees hired and existing employees retained by each     330          

such enterprise, and the number of new enterprises that are        331          

subject to agreements and that established within each zone,       332          

including the number of new employees hired by each such           333          

enterprise.;                                                       334          

      (6)(a)  The number of enterprises that are subject to        336          

agreements and that closed or reduced employment at any place of   337          

business within the state for the primary purpose of               338          

establishing, expanding, renovating, or occupying a facility,      339          

indicating separately for each such enterprise the political       340          

subdivision in which the enterprise closed or reduced employment   341          

at a place of business and the number of full-time employees       342          

                                                          8      


                                                                 
transferred and retained by each such place of business.;          343          

      (b)  The number of enterprises that are subject to           345          

agreements and that closed or reduced employment at any place of   346          

business outside the state for the primary purpose of              347          

establishing, expanding, renovating, or occupying a facility.      348          

      (7)  For each agreement in effect during any part of the     350          

preceding year, the number of employees employed by the            351          

enterprise at the project site immediately prior to formal         352          

approval of the agreement, the number of employees employed by     353          

the enterprise at the project site on the thirty-first day of      354          

December of the preceding year, the payroll of the enterprise for  355          

the preceding year, the amount of taxes paid on tangible personal  356          

property situated at the project site and the amount of such       357          

THOSE taxes that were not paid because of the exemption granted    359          

under the agreement, and the amount of taxes paid on real          360          

property constituting the project site and the amount of such      361          

THOSE taxes that were not paid because of the exemption granted    363          

under the agreement.  If an agreement was entered into under       364          

section 5709.632 of the Revised Code with an enterprise described  365          

in division (B)(2) of that section, the report shall include the   366          

number of employee positions at all of the enterprise's locations  367          

in this state.  If an agreement is conditioned on a waiver issued  368          

under division (B) of section 5709.633 of the Revised Code on the  369          

basis of the circumstance described in division (B)(3)(a) or (b)   370          

of that section, the report shall include the number of employees  371          

at the facilities referred to in division (B)(3)(a)(i) or (b)(i)   372          

of that section, respectively.                                     373          

      (B)  Upon the failure of a municipal corporation or county   375          

to comply with division (A) of this section:                       376          

      (1)  Beginning on the first day of April of the calendar     378          

year in which the municipal corporation or county fails to comply  379          

with that division, the municipal corporation or county shall not  380          

enter into any agreements with an enterprise under section         381          

5709.62, 5709.63, or 5709.632 of the Revised Code until the        382          

                                                          9      


                                                                 
municipal corporation or county has complied with division (A) of  383          

this section.                                                      384          

      (2)   On the first day of each ensuing calendar month until  386          

the municipal corporation or county complies with that division    387          

(A) OF THIS SECTION, the director of development shall either      389          

order the proper county auditor to deduct from the next            390          

succeeding payment of taxes to the municipal corporation or        391          

county under section 321.31, 321.32, 321.33, or 321.34 of the      392          

Revised Code an amount equal to five hundred THOUSAND dollars for  393          

each calendar month the municipal corporation or county fails to   395          

comply with that division, or order the county auditor to deduct   396          

such an THAT amount from the next succeeding payment to the        398          

municipal corporation or county from the undivided local                        

government fund under section 5747.51 of the Revised Code.  At     399          

the time such a payment is made, the county auditor shall comply   400          

with the director's order by issuing a warrant, drawn on the fund  401          

from which such THE money would have been paid, to the director    403          

of development, who shall deposit the warrant into the state       404          

urban jobs and enterprise zone program administration fund         405          

created in division (C) of this section.                           406          

      (C)  The director, by rule, shall establish the state's      408          

application fee for applications submitted to a municipal          409          

corporation or county to enter into an agreement under section     410          

5709.62, 5709.63, or 5709.632 of the Revised Code.  In             411          

establishing the amount of the fee, the director shall consider    412          

the state's cost of administering the enterprise zone program,     413          

including the cost of reviewing the reports required under         414          

division (A) of this section.  The director may change the amount  415          

of the fee at such THE times and in such THE increments as he      417          

deems THE DIRECTOR CONSIDERS necessary.  Any municipal             418          

corporation or county that receives an application shall collect   419          

the application fee and remit the fee for deposit in the state     420          

treasury to the credit of the state enterprise zone program        421          

administration fund, which is hereby created.  Money credited to   422          

                                                          10     


                                                                 
the fund shall be used by the department of development to pay     423          

the costs of administering the enterprise zone program, including  424          

the cost of reviewing the reports required under division (A) of   425          

this section.                                                                   

      (D)  On or before the thirtieth day of June each year, the   427          

director of development shall certify to the tax commissioner the  428          

information described under division (A)(7) of this section,       429          

derived from the reports submitted to the director under this      430          

section.                                                           431          

      On the basis of the information certified under this         433          

division, the tax commissioner annually shall submit a report to   434          

the governor, the speaker of the house of representatives, the     435          

president of the senate, and the chairpersons of the ways and      436          

means committees of the respective houses of the general           437          

assembly, indicating for each enterprise zone the amount of state  438          

and local taxes that were not required to be paid because of       439          

exemptions granted under agreements entered into under section     440          

5709.62, 5709.63, or 5709.632 of the Revised Code and the amount   441          

of additional taxes paid from the payroll of new employees.        442          

      Section 2.  That existing sections 1724.05, 1724.06,         444          

1726.11, 1726.12, 5709.67, and 5709.68 of the Revised Code are     445          

hereby repealed.                                                   446